A Transformative Moment for the Politics of Sovereign Investing and Markets-Based Transnational Rule of Law Building:The Norway Pension Fund Global System Temporarily Goes Dark

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It seems that the enthusiasm of Europeans around "doing something"  in the Israel-Hamas War that would signal their own predilections but cost them little has now produced something of a revolution in the operation of the Norway Pension Fund Global and its now deeply embedded system of investing in accordance with its Ethics Guidelines and to use its shareholder status to seek changes to corporate governance an actions as active shareholders. I have noted the approach taken by the Norwegian Pension Fund Global over a series of posts, most recently  (1) The Israel Cases Continue to Evolve the Jurisprudence of the Norway Pension Fund Global: Norges Banks Excludes Caterpillar and a Number of Israeli Banks from the Investment Universe of the Pension Fund Global; (2) Russians, "Settlers", and Corruption: The Norway Pension Fund Global Announces Three Decisions. The Noewegian position might have been thought to have aligned Norwegian thinking with that of certain elements in China on the global "Jewish Question" politely euphemized  as the "National problem" of a Jewish majority Israeli State among hostile neighbors (Bricolage: 习近平主席在十四届全国人大一次会议闭幕会上的重要讲话让海外华侨华人信心倍增 [President Xi Jinping’s important speech at the closing session of the 14th National People’s Congress has doubled the confidence of overseas Chinese] and 犹太利益集团势力庞大 美国无底线盲撑以色列 [The Jewish interest groups are powerful and the United States blindly supports Israel without any bottom line]).

That revolution was reported this way by IPE.com:

This summer, a furore erupted around the SWF because of its investment in companies linked to Israel’s war in Gaza as well as its occupation of the West Bank, which led to a hasty series of divestments, including the exclusion of the major US company Caterpillar — with the latter drawing disapproval from the US State Department.

On Tuesday, the Norwegian parliament voted in favour of a number of government proposals on the management of the GPFG, based on action that Stoltenberg had argued in a 23 October speech was necessary to preserve the fund’s nature as a financial investor, while living up to Norway’s international obligations. Parliament told the government to ensure the GPFG continued as a broadly diversified, global fund, with the aim of achieving the highest possible return at an acceptable risk, also requesting the government to review the fund’s ethical framework.

They also voted for the GPFG’s Council on Ethics to suspend recommendations on observation and exclusion, and for Norges Bank – which manages the fund via Norges Bank Investment Management (NBIM) – to hold off making decisions based on the old guidelines until a new ethical framework has been decided.

It seems that, as Global Capital Reported, that Norway's principles have a price which when high enough, may be too high to support.

The problem, perhaps, was not so much principle as it was a balancing of principle where that balancing was expressed through norms but realized through political decisionmaking around which Norway foud itself opposed by the United States--or more precisely by that sector of global markets in which U.S. companies operated and U.S. interests are implicated. In any case there is nothing particularly sacred or even robust about the Norwegian position--Norway has been irritated with,

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to use the old language, "Jewish stubbornness" on the matter of Israel for some tome. Yet whatever one thinks about the issue of Israel and more importantly on the question of who bears responsibility for the deaths in Gaza, and its character (the popular view is that is the responsibility of the Jews, but another view is that it is Hamas itself that, having built their military apparatus atop civilian structures and having used the population to further its military aims including the holding of hostages as they engaged in  an all out war, bear primary responsibility for both Gazan casualties and for the manipulation of aid to further suffering; a third view suggests collusion in the latter efforts by the apparatus of the United Nations and their allies (including the murder of Gazans by Hamas and its allies for "collaboration"--but all of this will be sorted out in the public sphere eventually, one way or another), the markets have spoken, and they have spoken louder than  it is possible for those who manage segments of the investment universe to contain, manage or change to suit their own political/normative tastes and judgments. 

Aslak Skancke, Chief Advisor to the Council on Ethics of the Government Pension Find of the Kingdom of Norway sent this notice to people on the NPFG listserve:

On November 4, the Norwegian Parliament asked the government to review the Fund’s ethical framework. In response, the Ministry of Finance has introduced temporary ethical guidelines and amended the management mandate. These changes will remain in effect until a new ethical framework is established.  During this interim period, the Council on Ethics will continue to monitor the fund’s investments to identify companies that contribute to or are responsible for production or behavior that violates the guidelines.  The Council will not make recommendations on observation or exclusion but will inform Norges Bank about companies it identifies for potential ownership engagement. Norges Bank will not make decisions on observation or exclusion but will follow up with companies through its regular ownership practices in accordance with the management mandate.  As a result, you should expect that notifications regarding exclusions or observations will be limited to revocations of existing exclusions.

The Government issued the following Press Release: The Government Follows Up on the Parliament’s Decision Regarding the Ethical Framework for the Pension Fund (Press release | No: 50 | Date: 7/11/2025)

On November 4, the Norwegian Parliament (Stortinget) requested that the government review the ethical framework for the Government Pension Fund Global (GPFG).Today, the King in Council appointed a public committee that will evaluate the ethical framework and other aspects relating to the responsible management of the GPFG.

"This review is necessary to safeguard the pension fund and key considerations. We must find a balance between the principles the fund is meant to uphold. The committee has important work ahead," said Minister of Finance Jens Stoltenberg.

The current ethical guidelines were last amended by the Ministry of Finance in 2021, following broad support by the Parliament. A unanimous Parliament affirmed that the fund has two equally important ethical objectives. One is to generate returns and safeguard values for current and future generations, and the second, to ensure the fund is not invested in companies that cause or contribute to serious violations of ethical norms. The committee’s mandate underlines how Norway is currently facing its most serious security policy situation since World War II. Companies’ value chains are increasingly complex, often involving a wide network of subcontractors from multiple countries. Moreover, the distinction between military and civilian technology has become more blurred.

"It is increasingly difficult to draw a clear line and to determine what constitutes a contribution to serious violations of fundamental ethical norms. We all benefit from having a framework that reflects the reality we currently live in," said Stoltenberg. The committee will assess and propose changes to the ethical framework and relevant aspects regarding the responsible management of the pension fund.

Committee Members:

• Svein Gjedrem, economist (Chair); Annie Bersagel, director; Alexander Wright Cappelen, professor; Marius Emberland, professor; Gunhild Hoogensen Gjørv, professor; Hanne Eggen Røislien, researcher; Arthur Sletteberg, CEO; Ulf Sverdrup, professor; Karen Helene Ulltveit-Moe, professor

 Change is certainly coming; and it is likely to spill over from the Israel issue to other far more significant normative conversations. We shall see. In the meantime,the Pension Fund Global goes dark as Norway reconsiders the best way that instrument can be used ti project Norwegian power in transnational private spaces. That after all is what this is all about (Sovereign Investing and Markets-Based Transnational Rule of Law Building: The Norwegian Sovereign Wealth Fund in Global Markets).